New to Crypto - What to do if you make a lot of profit?

CaptainRock

I recently decided to buy some crypto (with money I can afford to lose).

I'm a complete novice in all areas to do with tax and banking, I just know the very basics.

I was wondering if one of the currencies suddenly shot up in price and I made, say £200,000 profit what would the normal man in the street (me) have to do, concerning tax etc.?

gravel_2

If you sell (or exchange to a different token) then you will crystallise the gain. If the total capital gains across all assets exceeds the allowance (currently £3k) that will be a taxable event that must be reported to HMRC. You will need to report the profit to HMRC as part of self assessment and pay capital gains tax on it.

Good luck...

CaptainRock

gravel_2 said:

If you sell (or exchange to a different token) then you will crystallise the gain. If the total capital gains across all assets exceeds the allowance (currently £3k) that will be a taxable event that must be reported to HMRC. You will need to report the profit to HMRC as part of self assessment and pay capital gains tax on it.

Good luck...

How would I report it to HMRC and what information would I have to fill in?

Is there an example of what the online form looks like?

gravel_2

CaptainRock said:

gravel_2 said:

If you sell (or exchange to a different token) then you will crystallise the gain. If the total capital gains across all assets exceeds the allowance (currently £3k) that will be a taxable event that must be reported to HMRC. You will need to report the profit to HMRC as part of self assessment and pay capital gains tax on it.

Good luck...

How would I report it to HMRC and what information would I have to fill in?

Is there an example of what the online form looks like?

Purchase price, sell price most likely.

You can google this, there is plenty of guidance for CGT.

Exodi

"New to Crypto - What to do if you make a lot of profit?"

You won't.

penners324

Don't forget that your bank will probably consider crypto as dodgy and will freeze your account.

So no access to any money and you'd still need to pay the CGT!

Hoenir

CaptainRock said:

 I made, say £200,000 profit what would the normal man in the street (me) have to do, concerning tax etc.?

Employ an an accountant for tax advice

onomatopoeia99

Exodi said:

"New to Crypto - What to do if you make a lot of profit?"

You won't.

I did.  Not £200,000, but well into five figures when I crystalised by selling and getting out of crypto. Yes, I will have a significant CGT bill to pay and will need to do a 24/25 tax return.

penners324 said:

Don't forget that your bank will probably consider crypto as dodgy and will freeze your account.

So no access to any money and you'd still need to pay the CGT!

No difficulty transfering the GBP out of the (FCA registered) exchange through my Nationwide current account. Never heard a peep from them.

Exodi

onomatopoeia99 said:

Exodi said:

"New to Crypto - What to do if you make a lot of profit?"

You won't.

I did.  Not £200,000, but well into five figures when I crystalised by selling and getting out of crypto. Yes, I will have a significant CGT bill to pay and will need to do a 24/25 tax return.

I don't doubt that, the reason I made my post isn't because I think it's impossible to make money on crypto - anyone can look at the price history for BTC and realise that some people will have made a lot money (and of course, by it's nature, some people will have lost a lot of money).

The reason for my curt response to the OP was due to their demeanour. The OP states they are "New to Crypto", but worse than this is the implication that they are unlikely to be investing in bitcoin, by referring to multiple currencies and the potential for extreme volatility. It's made even worse that they've put on their rose tinted glasses and already dreaming about £200k profits.

As I'm sure you well know, novice crypto traders gambling investing in meme coins is one of the main reasons crypto has such a bad reputation to begin with. That's why I suggested they won't make a profit.

Hoenir

(Removed by Forum Team)

Trading in anything short term is a high risk strategy that's just as likely to lose money as make it.  In essence does not fall into a classification of either saving or investment. You can never be sure who is playing poker in a market. Has to be a winner and a loser. That's the nature of trading something intangible.  

Exodi

(Removed by Forum Team)

If it makes you feel any better - if someone had made a thread titled "New to Investing" and then went on to say "if one of the currencies shares suddenly shot up in price and I made, say £200,000 profit" I would have given the exact same type of response.